8/19/2019 G.R. No.

46274
Today is Monday, August 19, 2019

Constitution Statutes Executive Issuances Judicial Issuances Other Issuances Jurisprudence International Legal Resources AUSL Exclusive

Republic of the Philippines

SUPREME COURT
Manila

EN BANC

G.R. No. 46274 November 2, 1939

A.O. FISHER, plaintiff-appellee,

vs.
JOHN C. ROBB, defendant-appellant.

Marcial P. Lichauco and Manuel M. Mejia for appellant.

Wolfson, Barrion and Baradi and Ignacio Ycaza for appellee.

VILLA-REAL, J.:

The defendant John C. Robb appeals to this Court from the judgment of the Court of First Instance of Manila, the
dispositive part of which reads:

Judgment is hereby rendered in favor of the plaintiff and against the defendant, who is ordered to pay to the
former the sum of P2,000, with interest at the legal rate from March 11, 1938, until paid, plus costs.

The facts established at the trial without discussion are the following:

In September, 1935, the board of directors of the Philippine Greyhound Club, Inc., told the herein defendant-
appellant John C. Robb, to make a business trip to Shanghai to study the operation of a dog racing course. In
Shanghai, the defendant-appellant stayed at the American Club where be became acquainted with the plaintiff-
appellee, A. O. Fisher, through their mutual friends. In the course of a conversation, the defendant-appellant came
to know that the plaintiff-appellee was the manager of a dog racing course. Upon knowing the purpose of the
defendant-appellant's trip, the plaintiff-appellee showed great interest and invited him to his establishment and for
several days gave him information about the business. It seems that the plaintiff became interested in the Philippine
Greyhound Club, Inc., and asked the defendant if he could have a part therein as a stockholder. As the defendant-
appellant answered in the affirmative, the plaintiff-appellee thereupon filled a subscription blank and, through his
bank in Shanghai, sent to the Philippine Greyhound Club, Inc., in Manila telegraphic transfer for P3,000 in payment
of the first installment of his subscription. Later on the defendant-appellant returned to Manila from Shanghai.

Some months thereafter, when the board of directors of the Philippine Greyhound Club, Inc., issued a call for the
payment of the second installment of the subscriptions, the defendant-appellant sent a radiogram to the plaintiff-
appellee did so and sent P2,000 directly to the Philippine Greyhound Club, Inc., in payment of the said installment.
Due to the manipulations of those who controlled the Philippine Greyhound Club, Inc., during the absence of the
defendant-appellant undertook the organization of a company called The Philippine Racing Club, which now
manages the race track of the Santa Ana park. The defendant immediately endeavored to save the investment of
those who had subscribed to the Philippine Greyhound Club, Inc., by having the Philippine Racing Club acquire the
remaining assets of the Philippine Greyhound Club, Inc. The defendant-appellant wrote a letter to the plaintiff-
appellee in Shanghai explaining in detail the critical condition of the Philippine Greyhound Club, Inc., and outlining
his plans to save the properties and assets of the plaintiff-appellee that he felt morally responsible to the
stockholders who had paid their second installment (Exh. C). In answer to said letter, the plaintiff-appellee wrote the
defendant-appellant requiring him to return the entire amount paid by him to the Philippine Greyhound Club, Inc.,
(exhibit E). Upon receiving this letter, the defendant-appellant answered the plaintiff-appellee for any loss which he
might have suffered in connection with the Philippine Greyhound Club, Inc., in the same way that he could not
expect anyone to reimburse him for his own losses which were much more than those of the plaintiff-appellee (Exh.
B).

The principal question to be decided in this appeal is whether or not the trial court erred in holding that there was
sufficient consideration to justify the promise made by the defendant-appellant in his letters Exhibits B and C.

In the fifth paragraph of the letter Exhibit B, dated March 16, 1936, addressed by the defendant-appellant to the
plaintiff-appellee, the former said: "I feel a moral responsibility for these second payments, which were made in
order to carry out my plan (not the first payments, as you have it in your letter), and Mr. Hilscher and I will see to it
that stockholders who made second payments receive these amounts back as soon as possible, out of our own
personal funds. "As it is, I have had to take my loss along with everyone else here, and so far as I can see that is
what all of us must do. The corporation is finally flat, so it is out of the question to receive back any of your
investment from that source; the only salvage will be the second payment that you made, and that will come from
Hilscher and me personally, as I say, not because of any obligation, but simply because we have taken it on
ourselves to do that. (And I wish I could find someone who would undertake to repay a part of my own losses in the
enterprise!)" And in the seventh paragraph of the letter Exhibit C, dated February 21, 1936, addressed by the same
defendant-appellant to the same plaintiff-appellee the former said the following:

However, Mr. Fischer and I feel a personal responsibility to those few stockholders who made their second
payments, including yourself, and it is our intention to personally repay the amounts of the second payments made
by those few.

. . . And, finally, paragraph 8 of the same letter Exhibit C states: "We are to receive a certain share of the new
Philippine Racing Club for our services as promoters of that organization, and as soon as this is received by
us, we will be in a position to compensate you and the few others who made the second payments. That, as T
have said, will come from us personally, in an effort to make things easier for those who were sportsmen
enough to try to save the Greyhound organization by making second payments.

Article 1254 of the Civil Code provides as follows:

https://www.lawphil.net/judjuris/juri1939/nov1939/gr_l-46274_1939.html 1/3
8/19/2019 G.R. No. 46274
A contract exists from the moment one or more persons consent to be bound with respect to another or
others to deliver something or to render some services.

And article 1261 of the same Civil Code provides the following:

ART. 1261. There is no contract unless the following requisites exists:

1. The consent of the contracting parties;

2. A definite object which is the subject-matter of the contract;

3. A consideration for the obligation established.

In the present case, while the defendant-appellant told the plaintiff-appellee that he felt morally responsible for the
second payments which had been made to carry out his plan, and that Mr. Hilscher and he would do everything
possible so that the stockholders who had made second payments may receive the amount paid by them from their
personal funds because they voluntarily assumed the responsibility to make such payment as soon as they receive
from the Philippine racing Club certain shares for their services as promoters of said organization, it does not appear
that the plaintiff-appellee had consented to said form of reimbursement of the P2,000 which he had directly paid to
the Philippine Greyhound Club, Inc., in satisfaction of the second installment.

The first essential requisite, therefore, required by the cited article 1261 of the Civil Code for the existence of a
contract, does not exists.

As to the third essential requisite, namely, "A consideration for the obligation established," article 1274 of the same
Code provides:lawphi1.net

In onerous contracts the consideration as to each of the parties is the delivery or performance or the promise
of delivery or performance of a thing or service by the other party; in remuneratory contracts the consideration
is the service or benefit for which the remuneration is given, and in contracts of pure beneficence the
consideration is the liberality of the benefactors.

And article 1275 of the same Code provides:

ART. 1275. Contracts without consideration or with an illicit consideration produce no effect whatsoever. A
consideration is illicit when it is contrary to law or morality.

Manresa, in volume 8, 4rth edition, pages 618-619 of his Commentaries on the Civil Code, has this to say:

Considering the concept of the consideration as the explanation and motive of the contract, it is related to the
latter's object and even more to its motives with which it is often confused. It is differentiated from them,
however, in that the former is the essential reason for the contract, while the latter are the particular reasons
of a contracting party which do not affect the other party and which do not preclude the existence of a
different consideration. To clarify by an example: A thing purchased constitutes the consideration for the
purchaser and not the motives which have influenced his mind, like its usefulness, its perfection, its relation to
another, the use thereof which he may have in mind, etc., a very important distinction, which precludes the
annulment of the contract by the sole influence of the motives, unless the efficacy of the former had been
subordinated to compliance with the latter as conditions.

The jurisprudence shows some cases wherein this important distinction is established. The consideration of
contracts, states the decision of February 24, 1904, is distinct from the motive which may prompt the parties
in executing them. The inaccuracies committed in expressing its accidental or secondary details do not imply
lack of consideration or false consideration, wherefore, they do not affect the essence and validity of the
contract. In a loan the consideration in its essence is, for the borrower the acquisition of the amount, and for
the lender the power to demand its return, whether the money be for the former or for another person and
whether it be invested as stated or otherwise.

The same distinction between the consideration and the motive is found in the decisions of November 23,
1920 and March 5, 1924.

The contract sought to be judicially enforced by the plaintiff-appellee against the defendant-appellant is onerous in
character, because it supposes the deprivation of the latter of an amount of money which impairs his property, which
is a burden, and for it to be legally valid it is necessary that it should have a consideration consisting in the lending
or or promise of a thing or service by such party. The defendant-appellant is required to give a thing, namely, the
payment of the sum of P2,000, but the plaintiff-appellee has not given or promised anything or service to the former
which may compel him to make such payment. The promise which said defendant-appellant has made to the
plaintiff-appellee to return to him P2,000 which he had paid to the Philippine Greyhound Club, Inc., as second
installment of the payment of the amount of the shares for which he has subscribed, was prompted by a feeling of
pity which said defendant-appellant had for the plaintiff-appellee as a result of the loss which the latter had suffered
because of the failure of the enterprise. The obligation which the said defendant-appellant had contracted with the
plaintiff-appellee is, therefore, purely moral and, as such, is not demandable in law but only in conscience, over
which human judges have no jurisdiction.1awphi1.net

As to whether a moral obligation is a sufficient consideration, read in volume 12 of the American Jurisprudence,
pages 589-590, paragraphs 96, 67, the following:

SEC. 96. Moral obligation. — Although there is authority in support of the board proposition that a moral
obligation is sufficient consideration, such proposition is usually denied. . . . .

The case presenting the question whether a moral obligation will sustain an express executory promise may
be divided into five classes: (1) Cases in which the moral obligation arose wholly from ethical considerations,
unconnected with any legal obligations, perfect or imperfect, and without the receipt of actual pecuniary or
material benefit by the promisor prior to the subsequent promise; (2) cases in which the moral obligation
arose from a legal liability already performed or still enforceable; (3) cases in which the moral obligation arose
out of, or was connected with, a previous request or promise creating originally an enforceable legal liability,
which, however, at the time of the subsequent express promise had become discharged or barred by
operation of a positive rule of law, so that at that time there was no enforceable legal liability; (4) cases in
which the moral obligation arose from, or was connected with, a previous request or promise which, however,
never created any enforceable legal liability, because of a rule of law which rendered the original agreement
void, or at least unenforceable; and (5) cases in which the moral obligation arose out of, or was connected
with, the receipt of actual material or pecuniary benefit by the promisor, without, however, any previous
request or promise on his part, express or implied, and therefore, of course, without any original legal liability,
perfect or imperfect.

https://www.lawphil.net/judjuris/juri1939/nov1939/gr_l-46274_1939.html 2/3
8/19/2019 G.R. No. 46274
SEC. 97. Moral obligation unconnected with legal liability or legal benefit. — Although, as subsequently
shown was formerly some doubt as to the point, it is now well established that a mere moral obligation or
conscience duty arising wholly from ethical motives or a mere conscientious duty unconnected with any legal
obligation, perfect or imperfect, or with the receipt of benefit by the promisor of a material or pecuniary nature
will not furnish a consideration for an executory promise. . . . .

In view of the foregoing considerations, we are of the opinion and so hold, that the promise made by an organizer of
a dog racing course to a stockholder to return to him certain amounts paid by the latter in satisfaction of his
subscription upon the belief of said organizer that he was morally responsible because of the failure of the
enterprise, is not the consideration rquired by article 1261 of the Civil Code as an essential element for the legal
existence of an onerous contract which would bind the promisor to comply with his promise.

Wherefore, the appealed judgment is reversed and the costs to the plaintiff.

Avanceña, C.J., Imperial, Diaz, Laurel, Concepcion, and Moran, JJ., concur.

The Lawphil Project - Arellano Law Foundation

https://www.lawphil.net/judjuris/juri1939/nov1939/gr_l-46274_1939.html 3/3